Is Real-Time Bidding Inevitable in Retail Media Advertising?

Retail media networks (RMNs) helmed by Amazon and Walmart command 80%, according to eMarketer data cited by Forbes contributor Kiri Masters, yet about 70 such networks are duking it out for the remaining market share in North America.

As Masters pointed out, one headwind complicating the nascent retail media ad business is complexity: A diverse but fragmented ecosystem of different interfaces and workflows means that brands trying to place ads must deal with all of the headaches attendant to navigating each particular RMN’s peculiarities. With brands only being able to capably handle relationships with an average of six retail media networks — per Skai and the Path to Purchase Institute data — a solution could be very valuable.

Enter real-time bidding (RTB), which Masters suggested was an “inevitable” endgame for the retail media network industry and which has already become standard in the digital ad business.

“Real-Time Bidding represents the backbone of programmatic advertising, allowing for the automated buying and selling of ad impressions in milliseconds. When you visit a news website and see display ads appear almost instantly, you’re witnessing RTB in action—an entire auction has occurred in the background during page load,” Masters explained.

Benefits of RTB for Retail Media and Challenges Currently Facing Its Adoption

Three particular strengths of RTB were offered up by the Forbes contributor, each addressing an existing problem facing retail media networks, especially those smaller in size seeking to compete against Walmart and Amazon.

• Standardized interface: The widespread adoption of RTB would drive a standardized interface common to most participants. Advertisers could take advantage of a standardized platform to launch ads across a variety of RMNs at once.
• Real-time, unified reporting: Instead of reports being issued from individual RMNs, comprised of different metrics measured in relative isolation, widespread RTB adoption would allow for collation of data with individual breakouts, all from one interface.
• Larger pool of potential advertisers: A standardized RTB platform with many RMN participants would ostensibly draw from a greater pool of potential retail advertisers and brands interested in the same, “increasing competition and potentially improving yield for retailers while providing more options for brands to be seen in the right place at the right time,” as Masters suggested.

A host of challenges currently face the adoption of real-time bidding in the retail advertising space, however, including latency — the bidding process could add 100-plus milliseconds to page load — and relevance, although algorithms are improving by the day. Control and brand safety (keeping unwanted ads or brands out of the mix), data protection (valuable loyalty or customer data kept under lock and key for reasons surrounding both privacy and sales strategy), and the fundamental technical complexity of creating such an umbrella were also specifically underscored as problematic for wide-scale adoption.

Microsoft, Google Plan To Offer Standardized Retail Media Buying Service as Aggregators

The broader launch of RTB for interested retail brands may be on the near horizon, at least if Microsoft has anything to say about it.

“We’ve really been thinking about how we become an aggregation point across various networks of high-quality retail media supply and then really make it easy to activate a product campaign that runs across those networks in a standardized way,” said Lynne Kjolso, VP of Global Partner & Retail Media at Microsoft. “We very much believe that the best way to deliver that kind of advertiser value is going to be in a real-time environment.”

Masters emphasized the import of this move, calling for retailers to embrace the inevitable nature of RTB ad marketing via the upcoming era of tech-giant-backed aggregation platforms.

“Microsoft aims to extend its existing advertiser relationships — approximately 500,000 advertisers already using their platforms — to retail media supply, enabling a single product campaign to extend across multiple retail environments through RTB technology,” Masters wrote.

Google has also stated its intention to pursue the following path as a retail media advertising aggregator.

“This [Microsoft and Google pushing RTB platforms to a broad audience] presents a compelling proposition for retailers: access to a massive new pool of advertisers without the overhead of building direct relationships. For brands, it promises simplified campaign management across multiple retail properties,” Masters concluded.